Steve Hamilton is a Tampa native and a graduate of the University of South Florida and the University of Missouri. He now lives in northern Kentucky. A career CPA, Steve has extensive experience involving all aspects of tax practice, including sophisticated income tax planning and handling of tax controversy matters for closely-held businesses and high-income individuals.

Friday, July 17, 2015

National Taxpayer Advocate's June 30, 2015 Report To Congress

Twice a year the National Taxpayer Advocate submits a report
to Congress. The Advocate is required to submit these without prior review by
the Commissioner of the Internal Revenue Service, the Secretary of the Treasury
or the Office of Management and Budget. A report was issued June 30, and it
identified the objectives of the Advocate’s office for the upcoming fiscal
year.

The National Taxpayer Advocate is Nina E. Olson. We have
spoken of her before, and I am a fan.

The following caught my eye:

The most serious problem facing
U.S. taxpayers is the declining quality of service provided to them by the IRS
when they seek to comply with their tax filing and payment obligations."

Given that this is a co-equal reason for the IRS to
exist (the other being to collect revenue), this is a rather serious charge.

Consider the following:

·The IRS hung up on approximately 8.8 million
taxpayers during this year’s filing season. The IRS dryly refers to these as “courtesy
disconnects,” ostensibly as proof that they too have read Orwell’s 1984.

oThis number was up from 544,000 hang-ups during
the 2014 filing season.

·Only 37% of people using toll-free lines were
able to speak with a human being.

oDown from 71% last year.

·The IRS
has announced that it will no longer answer any tax law questions at all.

·The IRS answered only 17% of the calls from
people whose account was blocked on suspicion of identity theft.

·Don’t expect that hiring a tax professional will
resolve the logjam. Professionals were able get through less than 50% of the
time.

From the perspective of a practicing tax CPA, I found interacting with the IRS this filing season to be unpleasant, if not futile. I find myself with divided opinions: many of the examiners and officers I have met and worked with over the years are responsible and likeable enough. Gather them together however and you have an organization that has lost the trust and confidence of a sizeable number of taxpaying citizens.

Ms. Olson does point out that the IRS has been charged with
additional tasks in recent years, such as pursuing foreign assets
(FATCA) and "assisting" the American public with their health insurance
(ObamaCare). There has simultaneously been a reduction in agency funding.The GAO has reported that IRS funding declined approximately $900 million since fiscal year 2010, for example, resulting in the elimination of approximately 10,000 full-time equivalent positions.

Let’s be frank: under this Congress there will not be – nor
should there be – additional funding for an agency that has been weaponized for
political purposes. Paul Caron, a Pepperdine tax law professor, maintains a
count and compendium of IRS misbehavior at TaxProfBlog(http://taxprof.typepad.com/taxprof_blog/irs-scandal). He is perilously close to 800 days and will likely exceed that count by the
time you read this. If smoke indicates fire, then someone must have burned down the warehouse district to generate that much smoke.

Is there a solution? Yes, but it will probably have to wait
until November, 2016. But you already knew that.

About Me

Thirty years years in tax practice. It's a long time, and I have seen virtually everything short of the fabled tax-exempt unicorn. I was raised in Tampa, went to school in Missouri, taught at Eastern Kentucky University, lived in Georgia, got pulled to Cincinnati when I married, have in-laws in England and a daughter going to the University of Tennessee. I am not sure where I will wind up next, but I hope there is better weather.